Organizations have little choice but to overthrow their traditional business models as digital technologies sweep through their industry. And, according to Forrester’s James McQuivey, IT leaders have a major role to play in instigating that disruption.
Dr James McQuivey has three statements and a question for CIOs across all industries. Digital disruptors are rewriting the rules of business. The barriers-to-entry for many established markets have all but vanished. And unexpected competitors are swarming in. So, what is your business doing about it?
In his new book, Digital Disruption: Unleashing the Next Wave of Innovation, the VP and principal analyst at Forrester Research provides an unequivocal answer to business leaders everywhere: they must either join the revolution and become a digital disruptor themselves or accept that they will be swept aside in the race for customers’ hearts, minds and money.
Digital disruptors, who are capable of exploiting the megatrends of mobile, social, cloud and big data in order to find entirely new ways to get closer to customers, understand their needs and deliver innovative products and services. And they do all this, McQuivey says, “at a lower cost, with faster development times and with greater impact on the customer experience than anything that came before.”
We sat down with McQuivey, an expert in consumer marketing and mass communications who advises some of the world’s top CMOs, to discuss the role CIOs need to play in fostering disruption within their organization.
I-CIO: The central theme in all your writing on disruption is that organizations ignore at their peril the wave of digitalization sweeping through every industry, albeit at different rates. Are there people who view such pronouncements as over-hyping the threat?
James McQuivey (JM): Some business executives dismiss such ideas, saying that industry analysts have been telling them forever that “technology is going to change everything,” so why should they take any notice now? And it would indeed make life so much easier for them to continue to believe that they’re not under threat from digital disruption. The good news is that those who stop and listen quickly get the message. And then they might even accept that digital disruption is something they can enjoy, rather than hate. Importantly, it’s something they can do to themselves, not have done to them by competitors. That changes the conversation.
Not all industries are the same. In some — music, travel, finance, media and many others — the pace of digital disruption is all too evident. But how do you win over business leaders in conservative industries who don't seeing that happening to them yet?
JM: They are won over with a ton of examples and I never have to search very far to find them. Look at financial services companies: that’s a sector that is already getting disrupted by mobile payments companies with services like Square, which has inserted itself between the credit card-issuing banks and merchants; or PayPal, where you don’t even need a credit card, or Mint.com [the free web-based personal financial management service from Intuit] which pulls all your financial information into one online space. That’s digital disruption in action.
And what if you’re a luxury goods company? You may make the most beautiful, costly watches in the world, but you only have to look at all the functions and apps that a Pebble watch offers; you only have to realize that Apple and Samsung are investing heavily in digital watches to see that there’s a serious danger of you getting left behind.
I-CIO: Of course, successful digital disruption is going to require massive cultural change for some organizations. If you’re the only person in your company pushing for that change, you won’t be viewed as a digital disruptor — you’ll be seen as a troublemaker.
JM: I agree that you need consensus for digital disruption to take place. I do hear complaints from people who feel that they're the only person in their organization who is ready to hear about digital disruption and take action. That can be lonely, but if you can identify an external threat, something that exists beyond the range of your traditional competition that threatens to leave your business behind, then you’re halfway there. Often, once that’s been explained to colleagues, they quickly realize that their company doesn’t have a choice. No one wants to be the next book retailer to be squeezed out by Amazon. No one wants to look back and think: “We had the brand, the customers, the market reach, the channel management. Why didn’t we take action before it all slipped away?” That’s my message: make your colleagues see that the business has no choice.
The beauty of this is that you can start small. All you need are small teams of smart people with tons of energy, permission to break traditional R&D rules and the promise of funding if your ideas work out. I have many examples of how that approach has succeeded, even at big companies like Disney.
I-CIO: So what role do you see for CIOs — who might be seen as the natural leaders of all things digital — in helping the business become digital disrupters?
JM: There’s potentially a huge role for CIOs here, but it takes some of them time to accept this message because it’s a whole new way of working for many. They think their job is to spend money in the smartest way possible, to cut costs, and they get all wrapped up in vendor management, procurement best practice and approval policies.
In the past, they’d often shut down any behind-the-scenes innovation that was going on with free tools that they hadn’t approved. But these days, such free tools — cloud development platforms for building pilots of mobile apps, for example — are where all the exciting stuff happens, so the CIO needs to be able to support them.
They need to understand that people must be able to experiment and to test new ideas cheaply. They must invest in cloud options that support digital teams. They need to become the ‘center of yes’ in their organization, not the ‘center of no’, and often that will be about putting the skills and resources they have in their organization to work on initiatives already under way in the business, so that these can be made to happen faster and cheaper than without IT’s help.
Smart CIOs already see that as their role, or at least a logical extension of their role. Hungry CIOs are ready to take that role on. Fearful CIOs will cower and shy away from the challenge — right up until the point when they’re no longer relevant.
• Digital Disruption: Unleashing the Next Wave of Innovation by James McQuivey is out now.